1.         Preliminary comments

            The National Electricity Policy of February 2005 is proposed to be overhauled and replaced by the new Draft National Electricity Policy 2021 as there have been substantial changes during the period 2005-2021.

1. 1        The National Electricity Policy has the status of a subordinate legislation since the power and authority of National Electricity Policy (or revised Draft National Electricity Policy 2021) will flow from section 3 of Electricity Act 2003.

1.2       The importance and consequences of the present exercise are therefore as if the Electricity Act 2003 itself is being revised, particularly w.r.t. section 3.

1.3       For above reasons, we consider it essential that the draft National Electricity Policy 2021 should have included a full fledged statement of objects and reasons.

1.4       Ministry of Power letter of 27/04/2021 mentions section 66,79,86 of the Electricity Act 2003, but there are so many other aspects / subjects which have not been covered in the letter of 27/04/2021.

1.5       It is submitted that the Govt. of India / Ministry of Power should have issued a comprehensive statement of objects and reason since the piecemeal coverage in the letter of 27/04/2021 is inadequate.

2.         Role of CEA

            The very first para of National Electricity Policy 2021,  Para 1.1 opens with quotation from section 3.1 of Electricity Act 2003.

            ”The central govt. shall, from time to time prepare the National Electricity Policy and tariff policy in consultation with state governments and the Authority……”.

2.1       Therefore, the statute requires that the Govt. of India should prepare the National Electricity Policy “in consultation with state govt. and CEA”. CEA thus has a statutory responsibility w.r.t. National Electricity Policy.

2.2       However, the CEA itself is not fully constituted. The present constitution of CEA is as under.

Chairman - Sh. Dinesh Chandra, also holding charge of Member Hydro

Member/Thermal - Sh. Naresh Anand

Member Grid Op. & Distribution – Sh. B.K. Arya

Member Power System - Sh. Gautam Roy

Member E&C with addl. Charge of Member Planning- Sh. G.V. Mahender

2.3       IT is seen that out of 7 full time posts the incumbents are 5 with two posts being held on dual charge basis i.e. Member/Hydro and Member /Planning.

2.4       The CEA in its present setup is in a crippled state with two full fledged posts being held on part time basis.

2.5       As per Electricity Act 2003 section 70 (3).

            “The Authority shall consist of not more than fourteen members (including its chairperson) of whom not more than eight shall be full time members to be appointed by the Central Govt.”.

2.6       Hence, as per Act, CEA comprises up to 8 full time members (including Chairman) and six part time members, against which there are 5 full time members (including Chairman) and no part time members. The comparison of actual viz a viz provision in Act is as under.

                        Chairman      Full time Members              Part Time

Act 2003         1                      7                                              6

Actual                        1                      4                                              0

 

2.7       As per Electricity Act 2003 , consultation with CEA is a statutory requirement while preparing a new draft of National Electricity Policy. For this requirement to be met in letter and spirit Govt. of India must fill the vacancies in CEA and bring it up to full strength as envisaged in Electricity Act 2003.

2.8       There are several disciplines and fields that are of extreme importance that need to be included in the constitution of CEA within the limit of 8 full time and 6 part time Members .

2.9       As per table given in Para 2.6 above, it is possible to have 3 more full time members and 6 part time members in CEA, and suggested as under

Full Time

Member Planning    -           In place of dual charge

Member Hydro        -           In place of Dual charge

Member (Renewable)          New Charge

Part Time Member

                                    -           Nuclear

                                    -           Climate Change

                                    -           Regulatory

                                    -           Energy Audit and Efficiency

                                    -           Training and HRD

                                    -           Project Monitoring

3.         It would be anomalous and contrary  to Electricity Act 2003 if Govt. of India takes up the revision / overhaul of National Electricity Policy without first building up CEA to the strength as envisaged in the Act.

3.1       It is stressed and reiterated that in revision of NEP , Consultation with states and Consultation with CEA  must not be overlooked or sideline

3.2       Thus, while expert committee has at one of its members the chairperson CEA, since the CEA itself is crippled with a strength far below the provision of section 70, it follows that before taking up revision or overhauled of National Electricity Policy the pre-condition to  bring CEA to strength required under section 70 must be fulfilled.

3.3       Section 3 (i) of Act similarly makes it compulsory for consultation with state governments. This is equally important as consultation with CEA because the constitutional provision of electricity being a concurrent subject has to be fulfilled. Even otherwise, since the implementation of National Electricity Policy will necessarily impact and have repercussions on states, the safeguard of ensuring consultation with states is most  important . For example the provision in National Electricity Policy draft clause 7.21 regarding DBT of subsidy has been vehemently opposed by the farmers of the majority of states and the Ministry of Power had agreed (in meetings with farmers) to withdraw the DBT condition. This same condition should not have been put in National Electricity Policy 2021 since even otherwise as state subject it should be decided by states.

3.4       The Ministry of Power office order of 12^th April provides for representatives from 5 states which clearly does not include all states. This is a direct and clear non compliance of section 3 (i) of Electricity Act 2003 which mandates “consultation with State Govts”. On this ground alone the proceedings of the expert committee stand as invalid and against the statute.

3.5       Since the majority of discoms in the country are state owned, and provision of :consultation with state Govts” would clearly include Discoms owned by state Govts and similarly Transco, and Genco owned by States.

4.         Nuclear Power- para 5.16 to 5.18

4.1    In Para 5.17 it is stated about adding 10 GW nuclear capacity in next 10 years. However from NPCIL website it is seen that NPCIL is actively pursuing the JAITAPUR nuclear park envisaged to have 6 units of 1600 MW each, to be supplied by EDF (Electricity De France). There were press reports also regarding EDF proposal to supply 6 units of EPR type to NPCIL.

4.2       The same company and supplier are executing a 1600 MW  unit for Finland at Olkituoto. The work on the unit was started in 2005 with a commissioning date of 2009 which has slipped to February 2022. The capital cost has increased from original Euro 3 billion to now cost 8.5 Billion Euro.

4.3       Since he proposed units of NPCIL at Jaitapur would supply power to states/ consumers in India, there is a need that Expert group of the Ministry of Power on National Electricity Policy must hold an exclusive meeting with NPCIL so that cost and time details are known. The details are necessary since the proposed units would have been loaded as  must run operation and extremely high tariff, it needs to be seen how the high cost power can be absorbed. No state/ Discom would be willing to sign. PPA for such high cost power, and if the same is put in Nuclear power obligation mode, it would destroy the finances of Discom. Unless these points are discussed and clarified by NPCIL, the expert group must clearly inform NPCIL that such high cost power cannot be taken under renewable power obligation mode either.

            To summarize, the National Electricity Policy must provide clear cut safeguards against high cost run  power from such 1600 MW units particularly as there is no competitive bidding.

4.4       The NPCIL along with other company BHAVINI must be required to clarify the position regarding the 3 stage nuclear power to the country, and  would ultimately replace coal based units.

            With the first stage already generating about 7 GW, the second stage was to be achieved with a 500 MW fast breeder reactor at Kalpakkam, and the spent fuel from this would be used as fuel for Thorium based 3^rd stage reactors. The 500 MW prototype  fast breeder  reactor is expected to be completed in 2022, with cost of ?. 5850 Crore.

4.5       It is opined that National Electricity Policy must give adequate consideration to  NPCIL Nuclear units due to following factors.

i)          To safeguard against the high cost of 1600 MW French  EDF  units.

ii)        In view of the costly and  delayed EPR unit in Finland, the energy tariff of a similar  1600 MW EPR unit must not exceed the tariff of 540 MW Tarapur units. In accordance with the principle of “economy of scale” the 1600 MW unit should actually give power at a rate lower than 540 NW NPCIL Tarapur units. GOI must  put a condition  on EDF Jaitapur Units  that tariff should not exceed Tarapur NPCIL 540 MW units. If EDF  cannot give this guarantee  the entire project of Jaitapur with 6x1600 MW must be scrapped.

iii)       Since the Nuclear power tariff is outside purview of CERC, it is all the more necessary for National Electricity Policy to have safeguards against high cost power. The following units of NPCIL are expected to be commissioned  for which the tariff details must be known in advance.

 

 

5.         Techno Economic Clearance

            The Electricity Act 2003 by de- licensing generation gave a free hand for private players to set up thermal units / stations. Practically it was left to the market forces to decide upon location and size of new thermal stations.

            Now the situation has changed and it is considered necessary that a new thermal unit or station be set up  only if TEC is given by EA. The factors due to which the total Delicensing of thermal units has failed are as under.

·         Instance of 2x660 MW super critical unit at Godda Jharkhand wherein coal is to be imported from Australia, and supplied by ship and rail to Godda and then transmitted to Bangladesh. This project will adversely affect India by way of CO2 emission as well as loading of transmission system Distribution of forest cover adversely impacts environment. There is also the possibility of unwanted high cost power being dumped on Indian consumers.

·         The 1320 MW Chhindwara project is in Madhya Pradesh with coal supply from MP and PPA with MP. Whereas MP already suffers from surplus capacity of PPAs and backing down/ surrendering surplus capacity and paying for capacity charges without drawal of energy.

5.1       One of the consequences of abolishing the safeguard of techno economic clearance by CEA is the phenomenon of backing down of surplus capacity and paying of capacity charges without drawal of energy . Apart from Madhya Pradesh this problem is acute in Punjab and several other states

5.2       To begin  with, National Electricity Policy may make it compulsory for every state and Discom to disclose the details of backing down of surplus capacity and consequent payment to the IPPs or generators.

6.         Issues related to climate change

            The most significant factor that differentiates the position as of 2005 with the position as of 2021 is the issue of climate change/ global warming and the need to minimize carbon emissions. In fact this aspect was required to have been elaborated in details in the statement of objects and reasons. The Ministry of Power was required to have coordinated with the MOEF and CC to give the strategy to govern electricity generation in the coming years with regard to carbon emissions. The National Electricity Policy 2021 policy must give full details and justification for the factors behind the Nationally Determined climate change goals declared in the Paris agreement of 2015, particularly regarding

-           Achieving a target of 175 GW through non-fossil fuel source, particularly 100 GW solar, 60 GW wind and 15 GW small hydro plus biomass.

-           The target of reducing the CO2 emission per unit of GDP.

-           The target of creating a carbon sink of 2.5 to 3 Billion tons / year CO2 through increasing forest cover.

6.1       If indeed the issue of global warming and reducing CO2 are the major parameters on which capacity addition is to be decided and implemented in the coming years, up to 2030, then surely there is a huge obligation on power ministry to give the background, logic and rationale behind the Nationally Determined Contribution towards climate change and further how this translates into capacity addition figures.

            Thus, in 2015 the target given for electricity capacity addition was 175 GW  non fossil fuel based, and then in 2019 at the climate summit in United Nations, New York the further target is given as 450 GW Non fossil fuel based energy by 2030. This is  going to have a huge impact upon capacity addition and therefore there is a responsibility on the power ministry to give the details and justification of climate change issues on the basis of which the 450 GW by 2030 decision was arrived at.

6.2       Vide Ministry of Power discussion paper decarbonisation: Transition towards low carbon / clean energy. There are several points/ issues that are required to be clarified in details, briefly listed as under.

1 (a)     Road map to increase share of non fossil fuel and RE:

            (i)        Basis on which the target of 175 GW by 2022 was fixed

            (ii)       Basis on which target was enhanced to 450 GW by 2030

            (iii)      Projections of reduction in coal fired capacity in coming years.

2. (b)   Adoption of fast responding sources for balancing.

            (i)        Ramping of existing thermal stations.

            (ii)       Use of older thermal stations /units for flexibility based operation.

            (iii)      Strategy to reduce the minimum operating limit of thermal units to 40% or even lower.

3. (c)    Batteries for grid balancing

            (i)        Capital cost as Batteries is high cost option

            (ii)       Life Expectancy

            (iii)      Energy efficiency

            (iv)      Disposal of dismantled battery – space and cost involved

            (v)       Environmental impact of disposing dismantled batteries

            (vi)      Who is to pay for the cost of the dismantled battery and how.

4. (d)   Pumped storage  Hydro  for grid balancing

            (i)        4785 MW potentiated out of 96524 MW developed.

            (ii)       CEA to chalk out taking up pumped storage projects.

            (iii)      Role of states in developing PSP schemes as in case of West Bengal and Tamil Nadu.

            (iv)      Analysis of time and cost overruns of Tehri PSP 1000 MW scheme

            (v)       Role of BHEL in manufacture of PSP equipment at minimum time and cost.

5.         Hydrogen mission- CEA may develop a dedicated cell for exclusively dealing with all aspects and Hydrogen mission and giving study / recommendations for Govt. of India and States.

5.         Energy conservation and efficiently

            (i)        Specific areas need to be detailed for implementation –such as agricultural pumpset of high efficiency

6,7,8    Ministry of Power documents should give details of proposals related to EV, Micro grid, market development.

9.         An issue/ aspect missed out in the Ministry of Power discussion paper is the aspect of disposal of PV panels after the lifespan is over and the PV project /installation is to be scrapped. What are the environmental aspects and pollution w.r.t. disposed of old PV panels, and how the project developers intend to carry out the disposal of discarded panels, and the related issues of land utilization.

10.       As a parallel case of presently operating nuclear power stations of NPCIL. In finalizing the NPCIL tariff a provision has been kept for covering the reactor portion / radioactive components) for decommissioning  with a layer of concrete so that there  is no spread of radioactive emissions, to protect the environment. This cost of decommissioning (i.e. using concrete covering) is included as a component of tariff and thereby recovered from consumers in advance, through operating life and station.

7.         PPAs of old NPCIL units

            The draft National Electricity Policy should consider the case of old nuclear power stations of NPCIL which have operated 25 years or more and whose PPAs may have expired. The issues to be examined are

            a)         Old/ depreciated nuclear PPs would have low tariffs  (being depreciated) while fuel costs are also low.

            b)        Several discoms are already suffering from consequences of surplus PPAs – executed with newer  IPPs and having to pay for surrendered capacity of new thermal IPPs. Under these conditions if discom continues to avail power from old nuclear stations, it would have to surrender more power from newer IPPs and pay for surrendered capacity.

            The COD date of NPCIL units are as under

 

8.         PPAs of old/depreciated NTPC units

            There could be several instances of NTPC units whose PPA has expired, but whose fixed charges are low (depreciated unit) and energy charges are also low (being pit head unit)

            Such cases could be examined on station specific basis by CEA with recommendation on station specific basis.

9.         PPAs of private sector IPPs with high cost. There are several cases wherein states / Discoms entered into 25 years PPAs with IPPs on the basis of exaggerated energy demand projections, while on actual operation the stations were backed down with consequence of paying capacity charges without drawal of energy. Some states such as Punjab, Madhya Pradesh are experiencing this problem in extreme. In particular it is proposed that the award of 1320 MW Pench (Chhindwara) project needs to be taken up as a test case of contracting for unwanted (surplus) capacity with huge liability for PPA period on account of backing down.

10.       Consumer Choice

            The subject of consumer choice has been raised a number of times and on different platforms.

            One recent response by a NGO is that while separation of carriage and  content is not practicable of feasibly the alternate method for introducing consumer choice is to adopt open access and reduce the open access limit from 1 MW to 500 kW and then to 100 kW

10.1     With exodus of consumers (500 KW and above), followed by further consumers (100 KW and above) the discom would lose high revenue consumers and it would impact the financial viability of Discom. The viable operation of Discom cannot be envisaged if Discom is left with consumers of less than 100 kW  including domestic and agricultural.

10.2     In National Electricity Policy draft Para 7.13, 7.14 and 7.154 the issue of demand forecasting has been raised and for Discoms “to prepare a power portfolio manag